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How do property owners pay for an LID?

When property owners decide they want to form an Local Improvement District (LID), they assume responsibility to pay for the project if the project is approved by City Council. The City works with property owners to determine the scope of the project and develops an assessment methodology. A variety of methods are used, including square footage, linear footage or equivalent dwelling unit. Sometimes a combination of these methods is used, but square footage is most commonly used for projects in residential areas.

The City will design and engineer the project as well as manage it to make sure the work is done properly. But in most cases the City does not actually build the improvement. The work is bid upon by the private sector, and the lowest responsible bid is selected. The City never charges property owners more than the cost of building the project, even if the initial estimate at the beginning of the project was higher. Once the project is complete and final assessment is made, the LID ceases to exist. The City Auditor's Office then handles property owners' payments until paid in full.

Is financing available?

Property owners are not charged for transportation infrastructure improvements until the work is complete. At that time a property owner may either pay the assessment in full, or choose to finance it. All participants in an LID are automatically eligible for financing; usually over 5, 10 or 20 years with monthly or semiannual payments. If property ownership changes, payment responsibility remains with the property, and does not follow the previous property owner. Assessments are secured by a lien on the property until paid. If the assessment is financed, the property owner will receive an annual statement of interest paid, which can be used to substantiate interest payments should the property owner choose to deduct these costs. Consult your tax advisor as to whether such payments would be tax-deductible for you. The City does not provide tax advice.